The Indonesian Ulema Council (MUI), a dominant body of clerics, has decreed that cryptocurrencies as a mode of payment are unlawful according to Islam. Still, digital assets trading is acceptable, one of the leaders stated on Thursday.
The world’s biggest Muslim majority country, Indonesia, bans the use of crypto as a currency but allows investment and trading of digital tokens in the commodities and futures market.
According to the trade ministry, crypto trading in the commodity exchange has hit the 370 trillion rupiahs ($25.96 billion) mark this May. The total trading by the end of 2020 was priced at 65 trillion rupiahs, with 6.5 million traders up from the previous 4 million.
According to the Shariah law, cryptocurrencies are forbidden as a means of payment. This is because they carry a sense of uncertainty and harm with them and violate state laws, said Asrorun Niam Sholeh, the MUI’s head of religious decrees.
Cryptocurrency trading is also unlawful, with the MUI comparing it to gambling since it does not adhere to Islamic rules_ goods have no physical form, a precise value, and an exact amount.
The MUI does allow crypto trading provided it meets Islamic rules, has an underlying asset, and carries explicit benefits, said Asrorun.
The commodities exchange allows hundreds of cryptocurrencies to trade by adhering to the safety and reasonable governance requirement of the blockchain system.
The MUI’s decree is not backed by the government and is not legally binding, but the ruling can potentially affect investment decisions by some Muslims.